Tuesday, May 31, 2011

WASHINGTON — The European Union has set new environmental and labor standards for the crops used to make biofuels there, angering U.S. farmers who worry that such restrictions could spread to other products and countries.

The standards include greenhouse gas limits that biofuel feedstocks must meet, and U.S. soybeans don't qualify as a feedstock for European biodiesel.

Also in the rules is a requirement that exporters be able to trace the source of a shipment back to the farms on which it was grown, something the U.S. industry can't do with existing storage and transportation practices.

"They're dictating to us how we need to operate, and we don't like the precedent that sets," said Steve Wellman, a Nebraska farmer and leader of the American Soybean Association. "What's next?"

Environmental standards could be the wave of the future. Walmart is working on sustainability standards for the foods it sells, and there are several industrywide efforts nationally and internationally to develop common standards for growing soybeans and other crops.

"I don't think it's unreasonable for governments to do this. Harmonization is important globally," said Jason Clay, a senior vice president for market transformation at the World Wildlife Fund. Such rules prevent countries from undercutting others with poor environmental or labor practices, he said.

A coalition called the Round Table on Responsible Soy, which included U.S. agribusiness giants Monsanto, Cargill and Archer Daniels Midland, reached agreement in 2009 on a set of standards covering treatment of workers as well as rules protecting water and soil quality, preventing greenhouse gas emissions and banning dangerous farm chemicals. U.S. soy growers did not participate in writing the standards.

The European Union's new biofuel rules reflected concerns that increased production of palm oil and other crops could encourage destruction of rain forests and other environmental harm.

Biofuel feedstocks are required to reduce greenhouse emissions by 35 percent in comparison with petroleum, but soybeans are credited with only a 31 percent reduction regardless of where they are grown. European-produced rapeseed, or canola, is rated at 38 percent. The calculations take into account factors such as how much energy is used to produce the crop and whether forests were cleared to grow it.

The EU standard rises to 50 percent in 2017.

Ratings revision

Kasper Zeuthen, a spokesman for the European Commission in Washington, said revisions in the soybean ratings will be considered using new data provided by U.S. and Argentinean growers.

The European Union was the third-largest market for U.S. soybeans last year at 2.6 million metric tons, well behind No. 1 China at 24.3 million tons, according to U.S. Agriculture Department data.

The U.S. soybeans are crushed for livestock feed in Europe, and then the oil has typically been used to make biodiesel, which is more popular than ethanol in Europe. Using the soybean oil for food isn't an option because of European objections to biotech crops.

For now, there's still a market for the oil as biodiesel. Germany, which does much of the soybean processing in Europe, implemented the biofuel standards earlier this year, but other EU countries haven't yet, so they can still use the oil for biodiesel, U.S. industry officials say. The crunch will come when all 27 countries have the rules in force.

Still, the traceability requirements and other rules will remain a concern, and farmers want an agreement that would cover all U.S. soybeans.

U.S. Trade Representative Ron Kirk told the House Agriculture Committee recently that the administration "engaged the EU very early" with U.S. farmers' concerns.